Forum Clusters 111215.xlsx
The IWM robot stop at 71.02 was hit early and large players kept selling heavily until the close after some lunch time respite. There were clear negative divergences from the RT 20DMF, especially in the final minutes of trading where the late price bounce came from small players only. The day’s final money flow strength was about 100% below average and the 20 DMF switched from a buy to a neutral mode.
The IWM robot is waiting in cash for the next signal because the ST and LT settings are contradictory. From a pure multi-pivot analysis, the first support cluster down to Weekly S3 (69.54) will have a hard time resisting the selling pressure from the first resistance cluster with a floor demand/supply power ratio of 7-to-32. The 20 DMF action suggests that large players are aiming at filling the gap created on November 30 and it is consistent with a WS3 target. From a market liquidity standpoint, the next 4 days will see record liquidity injections into the banking system by the Fed and maybe that’s why algorithms are pushing prices down before buying aggressively again at a better VWAP. Also, maximal pain for this Friday’s IWM option expiration is around 73.50 so a strong imminent bounce cannot be excluded from possibilities.
All the hard work done by Pascal on the GDX Robot developments are paying remarkably well (please see his GDX comments). We cannot stress enough how important it is to diversify your trading activity between the two uncorrelated robots. Our real-time money flow technology will allow us to issue intraday alerts on the end-of-day GDX signals changes from now on, while we still need to create a new real-time IWM robot for similar reliable intraday alerts on IWM. With ATRs between 3 and 3.5%, it can make a difference of 10% on the 3x leverage positions!
Billy
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